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Quest Means Business
U.S. House Approves Resolution to Formalize Procedures of Impeachment Inquiry into Trump; Donald Trump: Johnson & Farage Would Be "Unstoppable Force" in the U.K.; ISIS Announces its New Leader After Death of Baghdadi; Fiat-Chrysler and Peugeot Bulk Up For The Future In A Mega Merger; U.S. House Votes To Formalize Trump Impeachment Inquiry, Facebook Beats Q3 Expectations, Defends Ad Policy. Aired 3-4p ET
Aired October 31, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:13]
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: All right, it is the final hour of trading on Wall Street and it's a Halloween horror with U.S.
stocks with the Dow around 250 points lower, down nine-tenths of a percent. Those are the markets and these are the reasons why.
An automotive mega merger. Fiat and PSA agreed to create one of the world's biggest carmakers.
The motion passes. U.S. lawmakers vote to move ahead with impeachment proceedings against Donald Trump.
And up in smoke. Altria warns the value of its e-cigarette business is plunging.
Live from the world's financial capital, New York City. It's Thursday, October 31st. I'm Eleni Giokos in for Richard Quest. This is QUEST MEANS
BUSINESS.
All right. A very good evening to you. Great to have you with us and tonight, Fiat-Chrysler and Peugeot bulk up for the future in a mega merger
that will create a $48 billion giant. FCA and PSA agree to get together vaulting to world number three in the auto sector.
Fiat-Chrysler shares are pushing higher, up around two percent; Peugeot is down sharply as you can see, almost 14 percent in the red. Now, the deal
comes amid a global slowdown in car sales as economies around the world started to sputter. The car industry is facing a reckoning over a changing
business model.
We've got Anna Stewart with us in London. And Anna, I mean looking at the share prices, it is clear what investors think of both companies and who is
going to favor. Why the big divergence here?
ANNA STEWART, CNN REPORTER: It tells a story, doesn't it? This is a marriage of equals, a 50/50 share swap. And yes, looking at the share
price, you can see that clearly, one party is bringing more perhaps to this marriage than the other one.
Now looking into the detail and this is what we got today in speaking to analysts, you can see why there is a divergence here, why perhaps Peugeot
shareholders aren't quite as happy.
First of all, take into account the market caps. Take into account the dividend payment plans. And then consider that the Fiat shareholders in
this deal will get a $6 billion payout as well as the proceeds of selling off a robot making unit.
Peugeot on the other hand will also get proceeds from a divestment, but they have no payout. And effectively, an analyst from Jefferies that I
spoke to today says that this means that Peugeot is effectively paying a 32 percent premium forfeit.
CHATTERLEY: Okay, so let's talk about the French government because there was a deal that was meant to occur with Renault that didn't come through
and we know the French government had a stake in Renault, but the French government also has a stake right now. The big question is, what is the
regulator going to think of this deal? Do you think that could be a challenge?
STEWART: Well, all eyes are on the French government because that was certainly the sticking point for what Fiat-Chrysler said when it came to
the Renault deal that was scuppered back in June. They said, due to political conditions, it just simply wasn't possible and not much has
changed in terms of political conditions since then.
I would say Renault had the Nissan alliance, all the problems surrounding that, and the Carlos Ghosn arrest. The purge was many ways simpler, but
also I think, perhaps they've learned a lesson. A lot of investors, a lot of analysts, there was a lot of disappointment that that didn't happen for
Renault.
For Peugeot to be relevant in the future, they really do need to bulk up. Peugeot is failing to meet the emissions testing standards at the moment
having to pay up huge amounts of money, for instance, to Tesla for CO2 credits. They need help. They need investment and they also need to
invest for the future -- Eleni.
GIOKOS: All right, thank you very much for that, Anna Stewart. Now the race to dominate the global auto market is ruthless and high paced.
Alliances are quickly being formed in an industry that's changing fat.
Fiat and Chrysler began merging back in 2009 in the depths of the financial crisis. Look at this. As it stands that right now, you've got VW, Nissan,
and Toyota, the top three in terms of car sales globally.
PSA, FCA sitting at the bottom end of the spectrum, but a stronger tie up have since accelerated around them and combined FCA and Peugeot would leave
Ford and General Motors in the dust and they will be right on the bumpers of Toyota, Nissan, and Volkswagen as you can see coming in at fourth place.
And we are talking about car sales combined of 8.7 million.
These companies are redlining to stay ahead of the competition. Now, the theory is whoever develops electronic and autonomous vehicles first will
dominate the car industry and of course the future within this space. And even the big players realize they need to combine and share the huge costs
it's going to take to get there.
[15:05:00]
GIOKOS: Now automotive expert Lauren Fix aka the Car Coach is in Buffalo, New York for us and she brings us more details. Great to have you with us,
Lauren and what an incredible day I mean looking at these equals so to speak, coming together and taking on fourth place globally. What do you
think of this potential deal and will they be able to combine to create more efficiencies within the companies?
LAUREN FIX, THE CAR COACH: Well, we do know that John Elkann is going to be running the business. He is going to be CEO. We know that he wanted to
get rid of FCA. It was sort of an anchor for him. You had Fiat that was pretty successful, but then Chrysler, when they merged the companies
together, the real sweet spot for FCA is Jeep and Ram trucks. They sell them well on a global basis.
So merging together with someone else to help, as you said, displace some of the costs of some of the new technologies that are coming was really
wise idea. But trying to -- merging with the French car company, before with Renault and Mitsubishi and Nissan was obviously not going anywhere.
The French government wanted too much.
So therefore merging in with Peugeot or PSA was a very wise move, and they're going to be selling quite a few vehicles. We're looking at 8.7
billion vehicles expected to be sold globally.
GIOKOS: Eight point seven million, right? Is that the number that we're looking at?
FIX: Eight point seven million, yes.
GIOKOS: Okay. So what I'm also curious about, I mean, you mentioned the French government and I guess that's going to be the sticking point. Do
you think that they're going to let this deal through because they want to protect jobs, they want to make sure that they've got you know, their
factories, their manufacturing capabilities stay in the country, but yet we know that the head office would then move to the Netherlands.
FIX: Right. They will also have offices in Milan and also in the U.S. It's interesting when you when you look at all of the statements that have
been put out by both companies, they're claiming there's going to be no plant closures, and that would be good.
I do know that here in the U.S., they are paring down the total model line from Maserati and Alfa Romeo and they're having some issues in Latin
America as well with those two product lines, but they're still pushing to broaden that Jeep and Ram truck lineup because that's where they're making
their profit margin.
GIOKOS: Look, let's talk about the R&D spend and of course autonomous driving and just changes within the industry. Who do you think is leading
right now and would a combined entity lead the way and you know, take the other big players on?
FIX: Well, I think when you're trying to play against the other big players, you better be putting some product out in the marketplace, and
some of the Chrysler product is getting old and they need a new product and to invest in new product and tooling really increases operating costs, but
partnering with Peugeot who has been desperately looking for years to try and get some sort of dealer network, it's very expensive.
So if you can partner with somebody like this, it allows Peugeot to bring in the Opel brand lineup which they also own, bring it here to the U.S. and
in other countries. It'll allow for more vehicles to be sold, more profit margin, a lot of shared platforms and technology as they evolve to
autonomous cars.
We are way far away from that. But they also need -- they have very little electric vehicles right now and they need to get in that marketplace.
GIOKOS: Fantastic. Lauren, thank you very much for your time. Great to have you on the show. So there was a historic moments in the U.S. House of
Representatives earlier. Take a listen. And with that the House approved a resolution --
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA): The resolution is adopted without objection, the motion to reconsider is laid upon the table.
(END VIDEO CLIP)
GIOKOS: To formalize that procedure of the Impeachment Inquiry into President Donald Trump. The motion passed with a comfortable majority.
Every single Republican and two Democrats voted against the resolution.
We've got Tom Foreman in Washington for us to give us all the details. So where to from here then? Now that we've kicked off the process and to
formalize the impeachment process, there are a lot of questions, a lot of things that needs to be done.
TOM FOREMAN, CNN CORRESPONDENT: Yes, the way this works in this country is that basically the inquiry that's underway right now we'll continue, the
gathering of evidence, talking to witnesses, then it will kick out basically to a more open forum where people will get to hear all that was
done in private basically to begin with, even though both parties were involved.
Republicans hated that saying no, no, it has to be in public. Everyone has to see it. Democrats basically argued, we've done this kind of thing in
the past, just to keep it from becoming a big political sideshow. We want to get to the truth of things. That's what they say.
Bottom line is, from here, the House will probably -- we don't know this, but will probably have a vote on impeachment. If we look at the vote today
to move forward, it suggests that it will probably pass. The President would then be impeached at that point.
But all that means in the system here is that the President has been formally charged with violating some tenets of what it means to be the
President, and then the U.S. Senate would put him on trial where there would be a vote and there, the Republicans have the advantage and the odds
of them getting the two-thirds they need to, you know, to actually remove him from office, don't look good, at least, not at this moment.
GIOKOS: Yes, so what was interesting is just listening to, you know, some of the comments that came through today. Some Republicans were
specifically saying we shall see, you know, more detail so that there's a transparent process.
And on the other side, people are saying, well, let's go ahead with this. Some are calling this partisan politics. What is the word on the ground?
[15:10:14]
FOREMAN: Some of them are absolutely right to call it partisan politics at this point. That doesn't mean there is not a serious process in the middle
of it. Your lawyers here have a saying where they say, if the law is on your side, pound on the law; if the facts are on your side, pound on the
facts.
Right now, the Democrats are pounding on the facts, because they believe the facts show the President really did some things that are absolutely
wrong and he should be at least called to task for this and may be removed from office.
Republicans right now are pounding on the law trying to say, we disagree with the procedures. We think you're going about this in an unfair way.
We don't think you have grounds to move forward, not really wanting to talk about the facts very much which are kind of uncomfortable for Republicans.
So that's where we are right now. To say it's partisan, it is partisan mainly because that's how they've all broken out in this process. That
doesn't remove the fact that there is a very serious, very real question here about the President's behavior and whether that is an acceptable thing
to either party in this country in the long run.
GIOKOS: So from what we understand, the Democrats want to get this wrapped up and get clarity by the end of this year, putting a timeline on this is
going to be difficult with so many moving parts. Is it possible? Is it doable?
FOREMAN: No. Is it doable by the end of the year? It's doable. Is it possible to put a timeline on it to know that? No, it is not. Because
there are certain ways also that this could be sort of short circuited if Republicans want it. I mean they could have a motion to adjourn in the
trial. And by a simple majority, they could basically adjourn and just say, we just stop.
Or they could have a motion to dismiss, which they might be able to get away with. But the problem there comes back to what you ask about the
political side of it. If they did that, almost certainly they would pay a political price of voters and other saying yes, you knew he was going to be
convicted, so you just ran away from the whole thing.
So it's unlikely they would do that. But those sort of variables and the fact that we don't even know if he's going to be impeached is why it's
impossible right now to put a timeline on it. It could be by Thanksgiving, it could be by Christmas. It could be by New Year's. Who knows?
GIOKOS: Tom, thank you very much. Appreciate it.
FOREMAN: You're welcome.
GIOKOS: Okay. So after the break, we'll meet a man running to be Governor of California. He doesn't even want to win. He just wants to make a point
about Facebook. Join us.
(COMMERCIAL BREAK)
[15:15:05]
GIOKOS: All right, so it's a bit of a Halloween Horror show on the markets. Investors are reacting to reports that China believes a long term
trade deal with President Trump may not be possible.
That report that manufacturing in the Midwestern United States is also hurting sentiments as well. Today's falls come in spite of better than
expected earnings. As you can see, we're down seven-tenths of a percent and I want you to join me now with Clare Sebastian in the Haunted House of
earnings for some unconventional trick or treating. And she's brought a couple of friends with her. They clearly need to have a bit of a snack.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: They do. They need some juice.
GIOKOS: Great to have you with us. So let's start trick or treating. What do we have here? We have a pack of cigarettes from Altria. This is a
trick or treat.
SEBASTIAN: Yes. It's a Marlboro. This is a trick. Altria have taken a $4.5 billion dollar write-down. I think there's more.
GIOKOS: Oh, wait, there's another thing.
SEBASTIAN: There's more tricks there in there. Yes.
GIOKOS: Ah, Juul. This is why.
SEBASTIAN: Juul is the root of Altria's problems in this quarter. They invested in the company. They bought 35 percent last year for almost $13
billion. Today, $4.5 billion dollar write down. That is a big problem for the company. They posted a loss of $2.6 billion -- that's why it's a
trick.
GIOKOS: And no surprise there, I mean, exactly and we think that this was the future of smoking. What do we have here?
SEBASTIAN: Nintendo.
GIOKOS: i'm not going to confirm or deny me playing any of these games ever.
SEBASTIAN: This is the Nintendo Switch, but the real treat for Nintendo investors this quarter was the new version of that, the Nintendo Switch
Light. That launched just about 10 days before the end of the earnings period and they've already sold almost two million of them, so that really
contributed to their bottom line.
GIOKOS: Moving on to edibles now. What do we have here? This is Kraft. They've had a horrid time, haven't they? This is definitely a bit of a
horror show.
SEBASTIAN: This is -- you know, this is like getting a treat after a year of tricks basically. They've had to write down hundreds of millions of
dollars on some of their biggest brands including Kraft. You can see that their stock price for the year was up today a lot, but it's come down more
than 30 percent so far this year.
So today, earnings showed some signs of stabilization and that is why we're seeing this -- it's a minor treat though. I'd say maybe a bit of fruit.
GIOKOS: Do you have an edible in there as well. An Apple?
SEBASTIAN: An Apple?
GIOKOS: You're teasing me now. Yes. We're not talking about this apple. We're not talking about this apple. We are talking about wearables.
SEBASTIAN: Exactly. These are the Apple Air Pods, and this is what everyone is talking about -- wearables when it comes to Apple, because
iPhones are in a now fourth consecutive quarter of sliding sales. What is offsetting that is wearables. We've also got in there, a watch and
services.
Apple is showing that it does have life beyond the iPhone. Wearables revenue that was up 54 percent; services up 18 percent. Obviously that
relies on people buying things through their iPhone. The services, things like Apple Pay, but it does that Apple has a vision.
GIOKOS: And apparently, we need to be replacing our gadgets a lot more often, which is definitely -- I wonder how that's going to go down.
SEBASTIAN: They are expensive.
GIOKOS: Yes, I really like the screaming you did earlier. You recorded that. Thanks, Clare Sebastian, responding to the bad earnings.
All right, thank you very much, Clare. Appreciate it. And now let's shift focus. Facebook's latest earnings are a treat for investors. Its shares
are up more than two percent and Mark Zuckerberg used his call with analysts to defend the company's decision to continue running political ads
on the platform.
At almost exactly the same time, Twitter boss, Jack Dorsey said his site would no longer accept ads related to candidates or issues. Hadas Gold
joins me now from London. Is it a question of Dorsey versus Zuckerberg and a very different take on the way they see political ads or do you think
this is really about freedom of speech here?
HADAS GOLD, CNN BUSINESS REPORTER: Well, these are two social media platform rivals. I think it was very cheeky of Jack Dorsey to tweet that
out right as Mark Zuckerberg was beginning that earnings call, but in a thread of about 10 or 11, tweets Jack Dorsey laid out, as he said that
Twitter will no longer be accepting any political ads of any kind including from candidates or about issues. This is quite notable.
And as you can see that the tweet up there, "We've made the decision to stop all political advertising on Twitter globally. We believe political
message should earned, not bought." Now, keep in mind that the political ad buying on Twitter is not a huge part of their business. It's in the
single digits, around $3 million worth of revenue.
But for Twitter, they're taking a stand here quite differently than what Facebook is doing saying that they don't want to be involved at all in sort
of political ad buying because as we know, Facebook has been mired in sort of this debate for the last few weeks over the fact that they're not going
to fact check what politicians say in ads on Facebook.
So essentially, a politician could theoretically just lie in their political ads. But you and me, if you and me bought an ad because we're
not candidates, we would be subjected to different rules.
Now Facebook is really digging in on this policy, and Mark Zuckerberg said that they don't want to be in the action of trying to debate what's true
and not. They think that the public and the media are better suited for this and Sheryl Sandberg made some comments earlier today saying that this
is for them not about money. They say that the revenue that they also make from political ads is not by much.
[15:20:06]
GOLD: And that for them, it's about transparency and it's about freedom of expression. Really interesting to see how these two companies are taking
this in a much different sense.
But for politicians, I think Facebook becomes much more the center of their focus. Democrats on Capitol Hill have been praising Twitter's position,
but they all know that Facebook has a much bigger reach. Facebook's daily active users is more than a billion. Twitter's is in the hundreds of
millions. That's still a big reach, but the everyday person is more likely to be on Facebook than they are to be on Twitter.
But business -- the business of Facebook is doing quite well. I saw you put up the stock price there on Facebook. Clearly in terms of business,
this political controversy over Facebook is not affecting it. They made $17.7 billion of sales last quarter, $6.1 billion of profit.
The average revenue per user, Eleni, is up 19 percent. They're doing quite well.
GIOKOS: Yes, and Hadas, I mean, we also heard from a few experts saying, well, you know, Twitter wasn't really the platform for political ads, so it
wasn't a difficult decision for Dorsey to take.
It is the other social media platforms that really matter, and as you say, Facebook does get a lot more traffic as well. But the revenue side of
things does become a question even though Mark says it's really not, you know, a huge part of their revenue stream.
GOLD: Yes, and then the thing is, though, is that even though Twitter for example, is no longer taking political advertisements, that's not
preventing a politician from saying whatever they want on Twitter and Twitter has found itself and its own controversies over Donald Trump's
tweets, for example, and whether they should keep them up or not because people claim that his tweets in some cases are violating Twitter's policies
when it comes to things like language and how he speaks about other people.
These policies that these companies are putting on themselves are kind of causing them sometimes to contort into themselves. I'm quite curious to
see how much longer Facebook is going to hold on to this political advertisement policy. I'm not sure how tenable it is and its first test,
Eleni, will likely be in the United Kingdom. We have an election coming up on December 12. This is likely going to be the first major election and an
English speaking election that Facebook is going to have this policy tested.
GIOKOS: Thank you very much. Hadas Gold in London. My next guest says he is considering legal action against Facebook after it blocked him from
posting his own false ads on the platform.
Adriel Hampton registered as a candidates in the race to be Governor of California, not to try to get elected but to put a spotlight on Facebook's
policy of not fact checking political ads.
Facebook tell CNN, "This person has made clear he registered as a candidate to get around our policies so his content, including ads will continue to
be eligible for third party fact checking."
Adriel Hampton joins me now from San Francisco. Great to have you on the show. Thanks so much for joining us. First things first, what did you
make of the decision by Twitter? And Jack Dorsey to ban political ads?
ADRIEL HAMPTON, CALIFORNIA GUBERNATORIAL CANDIDATE: Yes, Eleni, thank you for having me. I want to push back first, because I want to be the
fabulist in this story, not CNN. You keep saying that I'm not running a real campaign. That is a lie. And I think that the media actually needs
to be responsible because you're feeding into the Facebook story.
Ten years ago, I was the first candidate to announce to run for Congress via Twitter. It got me quite a bit of attention, kind of like this. And
then I ran for Congress.
GIOKOS: So you are running. Are you running?
HAMPTON: I am going to do the same here. It is totally unfair. I am absolutely running. Yes. The Governor of California is one of the best
friends of the Silicon Valley abusers that I'm calling attention to here.
And one of the biggest problems in the State of California at this moment is that the whole state is getting burnt up and the power turned out
because of this Governor's past policy. We can talk about the story, but please ask CNN to stop repeating that.
GIOKOS: No. Okay. But that's very interesting because there's been, you know, there hasn't been clarity about the intention of your ads on
Facebook. And that is where then the confusion has come in.
I mean, are you saying that your intention has always been to run, despite the fact that --
HAMPTON: My intention is to beat Mark Zuckerberg and this policy. I don't know, did you see Damian Collins letter that he just sent to Mr. Clegg at
Facebook?
GIOKOS: No, I have not seen that.
HAMPTON: Okay, that letter cites my case, and actually, the eighth points in that letter, which the Minister put up about an hour ago on Twitter, the
eighth point to that is my exact argument that Facebook needs to treat everyone equally on this platform, by fact checking everyone.
Right now Donald Trump is running a billion dollar reelection campaign using false ads. And no one is saying anything about it because they don't
understand the way Facebook works.
GIOKOS: Okay, so your intention here is to run for Governor. Your intention is here to then go after Facebook as well. Now your ads have
been banned essentially.
HAMPTON: Yes, I'm going to get Zuckerberg and then I'm going to get Trump and then I'm going to get Newsom.
GIOKOS: How are you going to get them? What is then the plan? How are you going to get Zuckerberg and Trump? Please tell me.
[15:25:10]
HAMPTON: First, by letting people know that they are phoneys. That the Donald Trump campaign is run by a cut rate affiliate marketer who just has
more money than everyone else.
Secondly, we're going to get Mark Zuckerberg by having multiple politicians across the country, running these kinds of ads to draw attention to his
insane policy that says that you may lie on Facebook and pay to spread those lines.
How can a man give a speech saying that he is all about free speech and then go and turn around and say, but you can lie and pay me to spread those
lies? This is a $550 billion corporation. Now, you asked me about Twitter. It is very small. It's one twenty fourth the size of Facebook at
current market cap.
And I will also to CNN's great credit, when one of your reporters started inquiring from Twitter and from YouTube about whether they would allow
false ads on their platform? Twitter immediately changed its policy to allow no political ads.
GIOKOS: So let me ask you this, in terms of whether this is going to be an infringement of any -- in any way on freedom of speech that has also come
into question. And then how do you --
HAMPTON: Free speech is not paid speech.
GIOKOS: Got you. And I mean, and the reality is that when you have political ads going on any other platform, there's always regulation around
it people must complain --
HAMPTON: Right now, I'm the only politician being denied free speech on Facebook, which is incredible.
GIOKOS: Okay, so how do you see this playing out? What do you think Facebook is going to do? Mark Zuckerberg came out clearly and said, this
isn't about revenue. This isn't about money. This is about protecting people's rights to say what they want to sound on our platform.
HAMPTON: Well, we'll wait and see what he thinks of the next ads.
GIOKOS: All right, fantastic, sir. Great to have you. Thank you so much for your insights.
HAMPTON: Thank you.
GIOKOS: Good to have you on the show. Adriel Hampton from San Francisco joining us there.
All right, so mass protests have been raging for weeks in the Middle East. Now, another Prime Minister in the region says he is going to step down.
(COMMERCIAL BREAK)
[15:30:00]
ELENI GIOKOS, HOST, QUEST MEANS BUSINESS: Now, I'm Eleni Giokos, there's more QUEST MEANS BUSINESS in a moment when we bid farewell to Mario Draghi
as the ECB chief heads for the exit. And Iraq's Prime Minister agrees to resign after weeks of protests. Before that, the headlines this hour.
The U.S. house has now taken a significant step forward in its impeachment probe. Just hours ago, it voted to approve a resolution formalizing
procedures for the inquiry. It passed largely on party lines and marked the first time the full house took a vote related to the investigation.
The move now sets the stage for the next phase which will include public hearings.
The U.S. President is weighing in on the upcoming elections in the U.K. Donald Trump says he'd like to see Prime Minister Boris Johnson join forces
with Brexit party leader Nigel Farage, saying the two would be unstoppable. Mr. Trump also says even Americans are tired of hearing about Brexit, and
that he believes the U.K. will leave the European Union before the U.S. election in 2020.
Just days after the U.S. raid that killed the founder of ISIS, the terror group has a new leader. His name is Abu Ibrahim al-Hashimi al-Qurashi.
According to an audio message ISIS posted online. ISIS also confirmed for the first time that a weekend raid killed its founder, Abu Bakr al-
Baghdadi, but it warned the U.S., don't be happy, claiming ISIS is on the doorstep of Europe and is expanding.
North Korea launched two projectiles into the waters between the Korean Peninsula and Japan earlier Thursday. South Korea and Japanese officials
are treating them as missiles. If confirmed, it would be North Korea's 12th missile test since May. It comes weeks after nuclear talks between
the U.S. and Pyongyang broke down.
Seventy people were killed in a fire that ripped through a train in Pakistan's Punjab province. Authorities say a gas canister exploded,
sparking the fire. The gas-powered stoves are banned on trains, but police say a passenger was cooking breakfast on one when the device blew up.
Lebanon's president says he's working to change how the country is governed, saying the country must become a modern civil state. Michel Aoun
tweeted that mass protests, which saw the resignation of the Prime Minister have opened the door to major reforms. Demonstrations have fled across the
country for the last two weeks.
Saad Hariri is stepping down as PM, although President Aoun asked him to stay until there was a new government. We've got Becky Anderson in Beirut
for us. Becky, this is quite a significant development. Of course, this just happened a couple of days ago, but the situation has escalated quite
significantly in Lebanon. Do you think that we will see clarity over the next few days?
BECKY ANDERSON, CNN CORRESPONDENT: Yes, I mean, protesters have very basically given the political elite here 48 hours to come up with a plan
for them, to meet their demands. So, Michel Aoun spoke tonight, this was - - he is the president, of course, this was only his second speech since these protests began two weeks ago.
Remarkably, either perhaps not surprisingly to protesters here, he spent the first part of his televised address tonight, listing his achievements
in the three years since he was voted in. But then in a clear effort to address protesters, he said the people of Lebanon have lost trust in their
government, acknowledging that the people need more.
He pledged to create a civic state, as you say, saying quote, "sectarianism is a disease, we need to move towards a state where people are loyal to the
nation and not their sectarian --
GIOKOS: Yes --
ANDERSON: Ruler" -- oh, and he also said, he is staying. This was a scripted speech which most protesters here are likely to see as the
president speaking to the moment, not to the reality. They are calling for root and branch change to what is a deeply entrenched and constitutionally
supported system of sectarian patronage here.
And Michel Aoun, they say is part of that problem, not part of the solution. I have to tell you, his speech was received --
GIOKOS: Yes --
ANDERSON: With boos on the streets here, and then the beats dropped out of the mega speakers as they do every single night here, and the party
atmosphere began once again.
[15:35:00]
The most important thing that we all have to remember is that without change, this country is unlikely to get the international financial support
that it desperately needs to stave off economic collapse. It wants to unlock a billion dollars in loans, that is a cash line it desperately
needs. Washington providing more than a billion and a half in military assistance since 2006.
But the elephant in the room for the Americans right now is the increasing influence of Lebanon's government of the --
GIOKOS: Yes --
ANDERSON: Iran-backed Hezbollah and its allies. And I spoke to the Interior Minister about Hezbollah, which is a designated group, of course,
by the U.S. who have slapped sanctions on it recently. This is a conversation that we had about the effect of those sanctions on this group.
(BEGIN VIDEO CLIP)
RAYA AL-HASSAN, INTERIOR MINISTER, LEBANON: If you look at what has happened with the sanctions, I think at least from the banking sector's
point of view and from the center, we've done all what we possibly can to comply, even though in my opinion, definitely it has stopped Hezbollah
maybe activity to a certain extent, but it has also had a tremendous impact on the whole of the country.
(END VIDEO CLIP)
ANDERSON: Well, that was the Interior Minister speaking to me in an exclusive interview. More on that interview in the hours to come here on
CNN. But the bottom line here being quite simply this, we are yet to see whether protesters feel in any way appeased by what the president said
tonight.
The attitude from those that we have seen on the street is probably a no. The banks are supposed to open again tomorrow, still massive concern about
whether there will be a run on those banks after these institutions having been closed for a couple of weeks now.
The bottom line here is that nothing has changed as far as the protesters are concerned, despite the fact that we have seen the resignation of this
government. They say they want to see more, much more --
GIOKOS: Yes --
ANDERSON: To come.
GIOKOS: Just very quickly, Becky, is Hariri going to stay on in this transition phase because the president has asked him to do so?
ANDERSON: Yes, I mean, we haven't actually heard from Saad Hariri himself. In that interview with the Interior Minister, she said that she hoped that
he would stay on. The president here certainly asked him to --
GIOKOS: Yes --
ANDERSON: Form a transitional government or, you know, a caretaker government. But behind the scenes, I mean, the politics here are so --
GIOKOS: Yes --
ANDERSON: Complicated, one assumes that what he will want is an environment that he can make work. Many less ministries are sort of, you
know, a functional transitional government --
GIOKOS: Yes --
ANDERSON: That he can ensure that he can get on with making this place function again. So, it's very unclear at this point -- that's certainly
the president's intention is that he stays on. Very unclear whether that in fact will happen.
GIOKOS: Fantastic, thank you very much, Becky Anderson for us. All right, so Iraqi Prime Minister Adil Abdul-Mahdi has agreed to resign on the
condition that an alternative leader is found to take over. For weeks now, people across Iraq have staged protests against unemployment, corruption
and inadequate services like electricity and water supply.
The response by security forces has left more than 200 protesters dead and thousands injured. CNN's Jomana Karadsheh is in Istanbul for us. And you
know, looking at the developments in Iraq, I mean, we're seeing a commitment to resign only if there's a successor that is found. How
quickly can that happen?
JOMANA KARADSHEH, CNN CORRESPONDENT: Well, if history is anything to go by, Eleni, this is something that takes a very long time in Iraq.
Sometimes, you know, it could take as close to a year to agree on a government or Prime Minister. I mean, this always requires the consensus
of the various political parties.
And obviously it's a very divided country right now. So, if you look at what was announced today, you have the President Barham Salih in the first
-- you know, it's the first time we're seeing an Iraqi political leader coming out and really addressing these protesters, addressing the people.
But you know, if the purpose of that was to calm down the anger on the streets or to quell these protests, it doesn't look like that's worked.
You know, following his address, we saw tens of thousands of people pouring into the streets of Baghdad and other Iraqi cities. There's expectation
that this is going to go into the late hours of tonight and also Friday, that traditional day of protests.
People are expecting large numbers on the streets. So, you know, the message has been clear from the protesters. They want change, real change,
and they want it now, Eleni.
[15:40:00]
GIOKOS: Yes, I mean, look, it's interesting from a regional perspective here as well because we just spoke to Becky Anderson in Lebanon. We know
the protest action happening in various other countries within the region as well. And it all has to do with the economic scenarios and governments,
you know, corrupt activities and mismanagement of funds. Do you think that this is going to be an important sea change within the region?
KARADSHEH: Well, you know, if you look at Iraq, Eleni, it is a very unique country. This is a country since -- you know, under Saddam Hussein, that
population suffered so much from the sanctions during that time and look at, you know, following the ouster of that Saddam regime and the change --
GIOKOS: Yes --
KARADSHEH: That came afterwards. They've seen governments come and go. You've had parliaments come and go with the same empty promises as people
would tell you. They've been promised jobs, basic services, an end to this entrenched corruption that people blame basically for the failure of their
governments to deliver on any of these promises.
And you're talking about an oil-rich country, and people just don't understand why they're basically suffering, why their economy is in this
current state and why people are not -- you know, the youth are not able to get jobs, and people --
GIOKOS: Yes --
KARADSHEH: Are not able to get constant electricity. So, it's a very difficult situation in Iraq. And you're getting to a point where people
are fed up. They have had enough. They have heard what they say are these empty promises for years now and they just want to see change.
GIOKOS: All right, Jomana, thank you very much, appreciate it. All right, so months of anti-government protests in Hong Kong have thrown the city
into a recession. Hong Kong's economy shrank 3.2 percent in the third quarter with no solution in sight to the city's political crisis. The
U.S.-China trade war has also done the territory no favors as Kristie Lu Stout reports.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): Another week, another weekend of chaos. Five months of ongoing protests have taken a toll on
this city, hurting small businesses and costing people their jobs. Jenny Chow is a shop owner in the Flash Point District of Tanwan(ph). This is
where a teenage protester was shot in the chest by police using a live round.
She sells pillows and bags made out of leftover fabric. Since the protests, her sales have plummeted. She's making the tough decision to
shut down.
UNIDENTIFIED FEMALE: We don't have business. So no people is going out. So, for me, like dropping 90 percent, for most of our friends, they're
dropping at least 50 percent. They all have to like quit the tenancy and then stop the business.
LU STOUT (on camera): Hong Kong Financial Secretary Paul Chan says the impact of the protest on the economy is comprehensive as the city faces two
consecutive quarters of construction. That's the technical definition of a recession. Now, Hong Kong had already been hard hit by the U.S.-China
trade war as well China's slowing economy, but the ongoing and relentless protests have packed a devastating punch.
(voice-over): Violent clashes have forced stores and restaurants to close repeatedly and have turned visitors off from the city. The Hong Kong
government is pumping $255 millions to support small businesses and a $2.4 billion stimulus package to help safeguard jobs and provide relief. But
that offers little relief to struggling business owners.
UNIDENTIFIED FEMALE: The government fund, it's difficult for us to apply. And even though we apply it, there may be part of them are grants, part of
them are loans. We don't know whether we can sustain to return to the loan, to pay back the loan.
LU STOUT (on camera): So, in concrete terms, what additional political tools, what additional emergency measures do you plan to deploy to have
order to be restored in Hong Kong?
CARRIE LAM, CHIEF EXECUTIVE OFFICER, HONG KONG: Kristie, the situation we are now facing is anti-government violence. So, the most effective
solution is to tackle the violence head on.
LU STOUT (voice-over): In Tenwan(ph), Jenny Chow(ph) is bracing for another weekend of chaos, dragging the economy and her dreams down with it.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
GIOKOS: Coming up, new troubles for Boeing beyond the Max. A cracking problem in some of the company's 737 next generation jets. The Qantas
mechanics union says the planes should be grounded.
[15:45:00]
(COMMERCIAL BREAK)
GIOKOS: Qantas is rejecting calls to ground its entire fleet of Boeing 737 next generation jets. That's the predecessor to the 737 Max which is
grounded worldwide. The union representing maintenance engineers in Australia called for the grounding, saying cracks had been found in a
second Qantas 737. Boeing shares are down for the day.
We've got CNN's Rene Marsh following all the developments for us. And Rene, it's a big week for Boeing, and now this just creates even more
issues, more cracks found in more planes.
RENE MARSH, CNN AVIATION & GOVERNMENT REGULATION CORRESPONDENT: You're absolutely right. I mean, all of this is happening, it seems like, all at
once for Boeing, and they just cannot get a break. It's one bad news story after the other. You know, we just got off of having two back-to-back
hearings on Capitol Hill where the CEO of Boeing essentially got hammered for the issues regarding the 737 Max, and now, this union that represents
aircraft maintenance engineers in Australia is calling on Qantas Airlines to ground its fleet of Boeing 737 NGs as you point out.
This is the predecessor of the 737 Max. They want the planes grounded to make sure that any structural cracks in the planes are repaired. Now, if
you remember, back in September, the FAA ordered inspections of this aircraft, which is, again, the earlier model of the Max, after Boeing told
them that there were potential issues with structural cracks being found in heavily-used planes. So on --
GIOKOS: Yes --
MARSH: Wednesday, Qantas confirmed that it was pulling out at least one aircraft out of service and many other airlines have done the same.
GIOKOS: Yes, and it's interesting that Qantas is saying, well, it doesn't want to ground its entire fleet because it costs them money and that's the
thing. We're even seeing that happening with the 737 Max. The economic implications are quite big, but you've got to weigh that up against the
safety issue as well.
MARSH: Right, and I will say the FAA has been very clear in which planes need to be inspected as well as Boeing saying which planes will be likely
affected here. And I think that what this airline is essentially weighing is that, look, if we know that this is an aircraft that has not flown that
many miles, this issue is likely not a problem.
[15:50:00]
So instead of --
GIOKOS: Yes --
MARSH: Grounding every single plane, we're going to focus more so on the ones that are heavily used. And like you said, we've seen that happen at
other airlines, so far I believe, there are about 50 that have been grounded so far.
GIOKOS: Fantastic, Rene Marsh, thank you very much. It's the end of an era at the ECB. On his last day, we'll have a look back at Mario Draghi's
career at the European Central Bank. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. It's the end of an era for Europe. Three pivotal figures are leaving their jobs today. In the U.K., House of Commons John
Bercow has called MPs to order for the last time. His exit was due to coincide with Britain's exit from the European Union. British lawmakers
had other ideas.
As you can see, a very good -- big goodbye. Then we've got Jean Claude- Juncker, a five-year term as European Commission president is at an end, and it's the end of the era as well for the likes of Mario Draghi. Eight
years he was in that position, stepping down from the helm of Europe's Central Bank.
CNN's Anna Stewart has this look back at the Draghi years.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice-over): He's known as Super Mario, the man who saved the Eurozone. He became head of the European Central Bank in
the middle of the European debt crisis. Europe had already bailed out Ireland, Portugal and Greece, but anti-austerity protests were sweeping
across the continent.
Markets were in turmoil, politicians were worried about the break-up of the Eurozone. Then in July of 2012, Mario Draghi said this.
MARIO DRAGHI, OUTGOING PRESIDENT OF THE ECB: The ECB is ready to do whatever it takes to preserve the euro.
STEWART: It wasn't even an official ECB meeting, but that speech defined Draghi's legacy. Three words, "whatever it takes", it was enough to calm
investors nerves, the Eurozone survived. And although Draghi backed up his words with action, an emergency bond-buying program called OMT, it was
never needed.
In his eight years as ECB president, Draghi never raised interest rates. In fact, he took rates into negative territory. He also oversaw a
controversial program of stimulus, buying nearly $3 trillion of Eurozone assets.
[15:55:00]
One press conference stands out in Draghi's career. In 2015, a feminist activist made a surprise appearance. She showered him with confetti while
yelling end the ECB dictatorship. As seen as she was removed, Draghi coolly returned to his statement. It wasn't just what he said, but what he
wore that drew the attention of the financial world.
Some claiming the color of his tie indicated his stance on monetary policy. A methodology diligently pursued by French bank Credit Agricole. And it
was found completely lacking of any real correlation. No doubt his successor, Christine Lagarde will undergo similar scrutiny, perhaps on the
color of her scarves. Draghi enjoyed the job despite the enormous pressures it presented.
DRAGHI: It was originally a obligation. Then it became a welcome obligation, and then even a pleasure.
STEWART: Meanwhile, journalists wanted forward guidance on his next career move. His answer --
DRAGHI: But if you want more information, just ask my wife.
STEWART: Anna Stewart, CNN, London.
(END VIDEOTAPE)
GIOKOS: All right, so they're just moments away from the close on Wall Street today. As you can see, we're deep in the red, down 0.6 of a
percent. We'll have the final numbers right after this. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: All right, moments away before the close of trade here on Wall Street. Let's check in on the numbers. The Dow is down 170 points, we've
got the S&P and Nasdaq also in negative territory. Remember, those two hit record territory earlier this week, and of course, the big thing today, big
worries about U.S. and China have resurfaced.
That's despite a day of strong earnings and on the broader markets, of course, we're starting to see a closer look on all these companies that are
dragging the overall market down. Three-M, one of the worst performers, down 3 -- 2 percent, and of course that company was out with results not
too long ago.
Apple is a stand-out stock, up 2.25 percent. Lots of companies coming out with results as we've got Exxon and Chevron we're expecting to come through
tomorrow. Those stocks sitting in negative territory as well. And the big thing that most investors are focusing on, of course, you had the rate
decision yesterday showing that stimulus is still very much the name of the game.
But people are now talking about what happens from here. European markets also sitting in negative territory. Well, thanks so much for joining me,
I'm Eleni Giokos in New York, the league -- "LEAD" rather with Jake Tapper starts now. Cheers for now.
(BELL RINGING)
END
